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(particularly if the losses from the activity generate
substantial tax benefits) may indicate that the activity is not
engaged in for profit especially if there are personal or
recreational elements involved." Sec. 1.183-2(b)(8), Income Tax
Regs. Petitioner had $144,787 in gross receipts from legal
services. On his return, he reported $61,321 of business income
from the law offices and $44,369 of capital gain. Obviously,
petitioner does not rely on his farm activity for income. The
income from petitioner's law practice gives petitioner the means
to wait for the trees to grow. The losses from the activity
generate substantial tax benefits for petitioner. In addition,
he benefits from the recreational elements involved in visiting
his second home every weekend.
We consider whether there are elements of personal pleasure
or recreation. "The presence of personal motives in carrying on
of an activity may indicate that the activity is not engaged in
for profit, especially where there are recreational or personal
elements involved." Sec. 1.183-2(b)(9), Income Tax Regs.
Petitioner travels to his second home in the mountains every
weekend and spends up to 3 days in that home. He claims he
spends the equivalent of 1 day a month on activities allegedly
related to the apples and timber. When he purchased the property
he did not plan on using it to grow timber. As petitioner
admits, the property was purchased primarily for recreational
reasons; i.e., for use as a second home.
Petitioner mainly relies upon the argument that after the
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